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Guest Article

(From the October 15, 2007 issue of Deloitte's Washington Bulletin, a periodic update of legal and regulatory developments relating to Employee Benefits.)

EBSA Offers Online Penalty Calculator for Form 5500 Delinquent Filer Voluntary Correction Program

The Department of Labor's Employee Benefits Security Administration (EBSA) has established an online penalty calculator for Form 5500 filings pursuant to the Delinquent Filer Voluntary Compliance Program (DFVCP). The DFVCP provides eligible late Form 5500 filers the opportunity to avoid DOL-assessed civil penalties by voluntarily correcting the delinquent filing and paying a reduced penalty. According to an October 10, 2007 EBSA press release, the DFVCP calculator "makes it possible to accurately and simply determine the amount of civil penalties owed under the program by plugging in the type of plan, size of plan and number of filings."

The EBSA's Web site provides the following description of "How the Calculator Works":

The calculator is designed to calculate the DFVCP penalty for each plan that is submitted under the program. After entering the required fields the calculator will determine the amount owed on each individual plan filing, then provide a final amount due for all the filings being submitted for that plan.
The calculator is intended to be used for only one plan at a time. If more than one plan will be filing under the DFVCP, separate calculations must be done on separate web pages for each plan.
Filings for separate years may be included in a single submission for a plan. If so, the total DFVCP penalty for that plan may be capped. If all of the filings in the submission are small plan filings (generally, fewer than 100 participants at the beginning of the plan year), the per-submission cap is $1,500. If any of the filings in the submission are large plan filings (generally, 100 participants or more at the beginning of the plan year), the per-submission cap is $4,000. Although the calculator does not take into account the "80-120" rule (29 CFR § 2520.103-1(d)), that rule is applied for the purposes of calculating the DFVCP penalties. If you are eligible to use the "80-120" rule and are unsure of the penalty calculation, you may contact the DFVCP at 202.693.8360. DFVCP penalties for 501(c)(3) organizations and for Top Hat and Apprenticeship programs are subject to a different calculation and cap as discussed below.
Caution: To be considered for the plan cap, all of the filings must be included in the same submission, which generally means that they must be included in the same envelope. If the filings are mailed separately, the penalty cap will probably not apply.
The U.S. Department of Labor is not responsible for any loss of calculations and data. The Department does not monitor or save data you enter online, and you cannot save calculations online. You may save your results by printing a copy or copying/pasting a copy into a text document on your computer before terminating your session. For more information on the collection, use and disclosure of personally-identifying information, see the Department's Privacy and Security Statement.

(Note, the "80-120" rule refers to a special rule permitting plans with between 80 and 120 participants (inclusive) as of the beginning of the plan year to keep the same filing status for the current year (i.e., small plan or large plan) as it used in the previous year.)

DFVCP filers do not have to use the penalty calculator, but it is "highly recommended to ensure compliance with the program's requirements." The calculator is available at www.askebsa.dol.gov/dfvc.

The information in this Washington Bulletin is general in nature only and not intended to provide advice or guidance for specific situations.

If you have any questions or need additional information about articles appearing in this or previous versions of Washington Bulletin, please contact: Robert Davis 202.879.3094, Elizabeth Drigotas 202.879.4985, Taina Edlund 202.879.4956, Mike Haberman 202.879.4963, Stephen LaGarde 202.879-5608, Erinn Madden 202.572.7677, Bart Massey 202.220.2104, Martha Priddy Patterson 202.879.5634, Tom Pevarnik 202.879.5314, Tom Veal 312.946.2595, Deborah Walker 202.879.4955.

BenefitsLink is an independent national employee benefits information provider, not formally affiliated with the firms and companies who kindly provide much of the content and advertisements published on this Web site, including the article shown above.